FirstBank FTHBPacket FinalNoBleeds - Flipbook - Page 15
FEDERAL HOUSING ADMINISTRATION (FHA) LOANS
An FHA loan is a mortgage insured by the Federal
Housing Administration and issued by federally
qualified lenders. They are designed for low-tomoderate income borrowers who can’t make a
large down payment on a home. In these loans, the
government isn’t lending the money. The borrower
pays a yearly or monthly insurance premium to the
FHA to insure the loan.
FHA loans are designed to help people with little to
no credit purchase a home. In addition to your credit
report, the lender can look at your payment history
for rent, car or utilities as a way to determine your
ability to pay.
Minimum credit score and down payment: Those
with credit scores of 600 or higher may generally
qualify for a 3.5% down payment. What’s more, the
3.5% down payment can be paid with a grant or a
gift, making home ownership more widely available
to those without a lot of cash.
FIXED RATE MORTGAGE LOANS
If you like predictability, a fixed rate mortgage
might be for you. As the name implies, fixed rate
mortgages have interest rates that stay the same
over the life of your loan. That means the principal
and interest portion of your monthly payment will
not change. Fixed rate mortgages offer predictability
and stability as you are planning your budget,
making them one of the most popular types of
financing available. While it is attractive to know
your monthly payment, fixed rate mortgages can be
the most expensive in terms of your up-front costs
due to higher interest rates.
Fixed rate loans can be either be conventional or
backed by FHA and have terms of 15 or 30 years.
Minimum credit score and down payment: Some
lenders will accept a 620 credit score but may
have additional requirements including lowering
outstanding debt. Down payment requirements vary
depending on your lender and type of loan, but a
minimum of 3% down is a good starting point.